Not Complicated

by Jacob Davies

Imagine that 310 people reside in the United States of America, and that it's a small village, not a country.

Of those 310, 238 are adults not in the care of others.The rest are children, institutionalized elderly and disabled, and members of the armed forces; their needs are taken care of directly.

Of those 238, 154 are in the civilian labor force. The rest are "students, housewives, retired workers, seasonal workers interviewed in an off season who were not looking for work, institutionalized people, and people doing only incidental unpaid family work". Some receive retirement income, some rely on the income of employed members of their household.

Of those 154, 139 are employed. They do, for wages, all of the jobs in the village. The jobs are the things we've decided to do this year - maintaining houses, repairing roads, tending to the sick, teaching children, doing paperwork, arranging who does what and where, making sure the electricity and gas keep working, making the things we need to replace the things that wore out or were lost, digging the metals out of the ground to make those things, drilling for energy in the ground, growing the food that we eat.

So far so good.

Now we have the leftovers. 15 people who want to work can't find a job in our little village. Why? Is there nothing to do? Well, nobody's hiring because times are a little tight, but there's plenty to do - the streets are dirty and broken, the pipes are old and need replacing, the bridge should be torn down and a new one put up.

Maybe 5 of the people just need a little time to look for a new job, think about things, get their life together. So you've got ten guys just standing around doing nothing even though stuff needs doing.

What's up with that?

I'm bored of discussions of tax policy and wealth distribution and blah blah blah. Money bores me. There's work to be done and people who want to do it. Why don't we put them to work?

Comments

[Gary Farber]

I think we owe them a new deal, a fair deal, a square deal.

[bobbyp]

Putting those people to work is not in the interests of those who currently run things in the village.

[jonnybutter]

Yeah, but what's more important in this situation - getting the work done that needs doing, or forestalling the possibility that anyone might gain an insignificant, unintended, advantage over someone else?

I think the answer is clear. Giving unfair advantage should always be intentional.

[Gary Farber]

Remarkably, 3 people are paid 50% of the total income of the entire village, if I'm not confused.

[russell]

There's work to be done and people who want to do it. Why don't we put them to work?

My thoughts on why:

Because we're not a small village, but a very very large nation, and unless you or someone you care about are one of the 15, then the issue is kind of abstract.

Likewise, other than the occasional dramatic exception (bridge falls down, water main breaks), the things that need doing are not front and center in folks' attention.

Because a lot of folks don't understand why it actually is in *their best interest* for the 10 to not just be standing around with their hands in their pockets.

Maybe it's true that 1, or 5, or 10 percent own the lion's share of whatever's available to be owned. And maybe it's not particularly in their interest to care one way or another about the 10.

So, screw them. Seriously, screw them. They're all set, they have no particular dog in this fight. They have their f*** you money, and f*** you is what we are going to hear from them.

So leave them out of the conversation.

I'm more worried about the other 90, or 95, or 99% of us. We really ought to be able to see ourselves in the shoes of the 10 quite easily. We don't have the resources to shield ourselves from the consequences of an exhausted public infrastructure.

But we can't seem to rouse ourselves to do the obvious and useful thing.

That's what worries me.

[Earnest O'Nest]

Is it possible to share one's job & not get the evil eye from other villagers that "are pulling their own weight"?

[Snarki, child of Loki]

Why aren't the 10 working?

Because there are maybe 20 loudmouthed, racist, borderline-certifyable idiots that are bitching about any effort to employ them.

Who is listening to them? ONE guy. Overweight and overpaid who is blocking the door, figuring if he can just hold out for a few more months, then HE gets to be top dog in the crumbling village.

Okay, ONE guy is too big a fraction of the whole. But he's a half-wit, so it's okay.

[Nate]

Gary Farber: "Remarkably, 3 people are paid 50% of the total income of the entire village, if I'm not confused.

It looks like the top 30 get 50%, according to this paragraph, "As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that's "higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring" 1920s.'""

However, scrolling to the paper below, it looks like the top 3 people in the village take home almost 25% of the production of the village, then the next 12 (top 1%-5%) take home about 15%, which leaves just over 10% for the other 15 in the top 30.

Then the other 281 of us get to split the remaining 50.3% of the stuff we make.

On the rest of the post though, it's all well and good to talk about abstract economic theories, but economics is just supposed to be a way to put resources to work effectively. If economics isn't doing that, it's not working for us. And it's just a tool, to do things humans want done.

Bring back the WPA. However, even if we called it "workfare", the version supported by Republican President Richard M. Nixon and Republican Governor of California Ronald Reagan, it'd still be declared just as socialist as the Republican health insurance reform bill passed six months ago.

[Jay C]

"Why don't we put them to work?"

Because "we" can't bring ourselves to decide who is going to pay them for their work.

SATSQ

[hairshirthedonist]

Here's an all-too-rare economist who truly appreciates this problem, IMO.

It is well documented that sustained unemployment imposes significant economic, personal and social costs that include:

loss of current output;
social exclusion and the loss of freedom;
skill loss;
psychological harm;
ill health and reduced life expectancy;
loss of motivation;
the undermining of human relations and family life;
racial and gender inequality; and
loss of social values and responsibility.
These costs are enormous and dwarf the measures that various governments have come up with to estimate losses arising from so-called microeconomic inefficiencies (such as transport systems not running on time etc).

[Hogan]

Remarkably, 3 people are paid 50% of the total income of the entire village, if I'm not confused.

Yeah, well, we create all the value and pay all the taxes, so shut up.

[Matt McIrvin]

I suspect that several of the 84 able but non-working adults would also get jobs if they thought they could find them, and perhaps should be counted with the 10.

[Gary Farber]

Excellent link, hairshirthedonist.

[Bernard Yomtov]

Why don't we put them to work?

Well, we have to pay them.

One way to accomplish this is to borrow some money and hire them directly. Another is to borrow money (again) and spend it on buying things, so that the businesses that make these things have every reason to hire more workers.

Doing these things also has important secondary effects. The newly employed workers will themselves increase their spending, etc.

Too bad no one has ever thought of something like this, or recommended it. It seems like an obviously sensible policy.

[Hartmut]

"Why don't we put them to work?"

Because that would be socialism and just what Hitler did. Also because the 10 only pretend to be looking for work because they hope to get unearned benefits that the 3 have to pay for.
---
Since I have not seen anyone quoting this venerable guy: http://blogs.alternet.org/speakeasy/2010/09/24/gop-senate-candidate-i-earned-my-money-the-old-fashioned-way-i-inherited-it/>the proper way to acquire money

[Countme?]

I blame librarians, the parasites.

You don't see "Atlas Shrugged" on public library shelves, do you? No sirree, you'll find that book under the beds of tumescent 13-year-old boys' beds, the pages dog-eared and sticky with the product of individual effort and free-market longing.

Frankly, I wish terrorist librarians would try to build a library in the shadow of the Ground Zero Amazon.com distribution center. Then we could place those insidious bookworms on the government's assassination list and begin wittling down their numbers.

Or, come January, the Republican Party could begin denying the parasites and their children with pre-existing conditions the ability to afford health insurance again, as it should have been all along.

Not as time-saving as assassination but somehow more satisfying, self-sufficient, and virtuous. Cheaper, too.

Clearly, also, having 30 people with half the wealth points to more inefficiencies that can be wrung out of the system.

That's 29 too many.

When one guy has ALL of the wealth, we can rest assured that overhead has been cut to the bone.

When I see 309 people in the village doing everything with nothing, not just more with less, I'll know it's time to finally eliminate every least cent of the One winner's taxes.

[russell]

Because "we" can't bring ourselves to decide who is going to pay them for their work.

"Who" is not the issue. We all pay taxes.

"Whether" is the issue.

[CaseyL]

Because those 15 unemployed provide a useful lesson to the 136 who do have jobs (139 minus the 3 who own most of everything) what will happen to them if they press for higher wages and better working conditions, or otherwise cause the Big 3 any financial or political inconvenience.

[wonkie]

What Harmut said. Why care about fixing roads and employing people when there's a simpleminded selfserving ideology out there that provides an easy way to abdicate responsiblity while giving one's self an excuse for feeling smugly superior?

[nous]

In Ireland under the Brehon law if a plaintiff was of lower status than the defendant in a legal matter revolving around property they had the right of troscad, which was a sort of culturally enforced mutual hunger strike. After giving notice, the plaintiff would go and sit outside the defendant's door and fast until the defendant agreed to arbitration or until the end of the legally specified period after which the defendant, if found guilty, would be liable for twice the disputed amount. If the plaintiff died of hunger during the troscad the defendant was guilty of murder.

Here's the real genius of the custom. During the troscad the defendant was also expected to fast for the duration. Failure to do so was a grave offense and brought great shame and loss of status upon the defendant.

We could use something like this about now.

[efgoldman]

Are we sure Countme? isn't Thullen?
Awful lot of stylistic similarities, there.
Has anyone ever seen them in the same blog at the same time?
QED!

And: Jacob, there you go making sense again. Damn, where did we go wrong?

[efgoldman]

I forgot the stern Ozzie Nelson/Ward Cleaver frown, there, Jacob.

[Rob in CT]

"Why don't we put them to work?"

Because somebody has to pay them. Some are willing, some are not. The town council is mostly composed of people who don't want to pay for it, or who represent those who don't want to pay for it.

Also, even some of the people willing to chip in to put those people to work are skeptical of the town council's competance to do... well, pretty much anything. Recent history has given them little reason to change their minds.

How's that?

[Chris J]

I think the electorate isn't serious about approaching these problems logically because, these days, they are not actually political or economic problems -- they are really theological ones. Asking a republican to see any benefit in more government spending is like asking a Baptist to accept the Catholic doctrine of transubstantiation. It's hopeless. To continue the analogy, the clergy of all the various denominations have no interest in building bridges because their power lies in preserving the differences, even if those differences are silly or inconsequential.

[Gary Farber]

"Are we sure Countme? isn't Thullen?"

Did someone say that?

[Hogan]

Also, even some of the people willing to chip in to put those people to work are skeptical of the town council's competance to do... well, pretty much anything.

And many people are convinced that only a greedy conniving sleazebag or a loser would ever serve on or work for the town council, which has now taken on the inevitability of all self-fulfilling prophecies.

[Countme?]

I'm thinking Lieutenant Calley could eke out a Republican win for Congress in 2010:

http://www.thedailybeast.com/blogs-and-stories/2010-05-13/renegade-soldiers-for-congress/

James Earle Ray, or maybe his attorney, would stand a good chance of a committee assignment in the the next Republican Congress.

Patty Hearst could win this year on a an anti-Death Tax platform.

[Sapient]

I hope that we do find some way to employ people who will do the work that obviously needs doing. Unfortunately, a lot of the currently unemployed used to make a lot more money than we can pay them now, say, to clean a dirty street. Some are still operating under the fantasy/hope that they can still get a job that would replace their previous income/lifestyle, or that their many years of experience might be relevant to a job that is "out there".

[Tony P.]

Jacob's parable reminds me of a story that my uncle likes to tell about the actual village of roughly 310 people in which he grew up.

It must have been in the late 1920s. The village was on Crete. In that time and place, the common currency was olive oil; the main form of wealth was olive trees. Olive oil was a staple food, but it was also a store of value since it keeps well, and a medium of exchange since it's easy to measure out. To be wealthy was to have barrels of the stuff in your cellar; to be poor was to not have enough oil to wet your bread with.

Some families owned olive groves; many did not. The ones who did not got by well enough, in normal times, by working for those who did. The daily wage for a laborer was a specified measure of olive oil.

In my uncle's story, there came a time when daily work got hard to come by. Whether it was because the Dow Jones Industrials Average (that nobody in the village had ever heard of) crashed on far-way Wall Street, who knows? All the village laborers knew was that nobody who had olive oil wanted to spend any of it. Even the shopkeepers suffered: laborers could not buy a bag of flour or a yard of fabric if they had no oil to pay for it with. Times were getting desperate.

The government, such as it was, had a presence in the village: a kind-hearted man who might have been the equivalent of Sheriff Andy Taylor, had the village been Mayberry. He saw the problem, and he made a plan.

One night, he invited the village lout over for a drink. This fellow was like an ox: big and strong and not very bright. Leading him by the nose was easy, especially after plying him with drink. The sheriff casually mentioned the names of several villagers who had barrels of oil stored in their houses, as he refilled the lout's glass. As the man grew more boisterous, he refilled it some more. As the man was leaving, he tripped over a heavy sledgehammer which the sheriff had carelessly left lying on the stoop.

The result was gratifying and prompt. The lout rampaged through the village, smashing gates, knocking down walls, breaking windows. Next morning, like it or not, the people with the barrels of oil and the smashed gates and walls and windows started hiring laborers. Olive oil began to circulate again. It wasn't exactly a WPA program, but it did save some villagers from starving.

Of course the sheriff had to arrest the lout and send him to the big city for trial. The evidence against him was irrefutable, but the sheriff had a quiet word with the judge and got the man acquitted.

That's my uncle's story, and he sticks to it. Nowadays, after a lifetime of hard work in the US, he has the equivalent of many barrels of olive oil stored up, himself, in the more convenient modern form of money in the bank. I have even heard him grumble about the taxes he has to pay. Yet he still tells the story (every chance he gets) with hearty praise for that clever sheriff in his tone.

Make of that what you will.

--TP

[Countme?]

Glenn Beck and FOX breathe new life into the fascist ravings of Eustace Mullins:

http://thepoorman.net/

I've been wondering why among all of the traditional targets of fascist movements through the millenia, the list of targets of Confederate Republican Tea Party hatred and their coming Second Amendment remedies (Muslims, liberals, gays, gay Muslims, government employees, Mexicans, Democrats, gay Muslim Mexican chaplains in the U.S. military, elites (ah, there's a dog whistle), teachers, the educated, experts, texperts, crabalocker fishwives, much of their own Party, gay, Muslim, and straight alike, the entire U.S. Government, scientists, the well-read, the old, the sick, uninsured children with preexisting conditions, uninsured adults with post-existing conditions, seekers of social justice (the dog whistle yet again), black men who dare to be president and black women who dare to be First Lady, and most of those who don't ...) has, until now, excluded the Jew.

Glenn Mussobeckalini now brings burning the Jew at both ends back into the "nationalistic conversation".

It was only a matter of time. It's surprising he hasn't called for the rounding up of gypsies. It's surprising too, and disappointing, no, that Beck and a Wall Street hedge fund manager, who thinks OBAMA is the one who is about to clear out the Warsaw ghetto, find themselves discussing train schedules together.

The hedge fund manager funds and enables his ultimate enemies and possibly his own murderers.

No doubt Jon Stewart will try to combat this latest projectile vomiting by Osama Bin Beck and the rest of the Goebbels media with satire.

No.

This, instead:

http://www.youtube.com/watch?v=ma-2Z_aHjTo

It's the bottom of the ninth and America needs a clutch hit.

[bobbyp]

hairshirt,

Glad to see you're still checking in with Billy Blog!

as ever,

[GoodOleBoy]

It took a long time to get this administration to put job creation on the front burner. I mean last year all one could hear was healthcare and cap and trade. Unemployment was bad then too, but many of the unemployed were still able to draw unemployment compensation so that reduced the pressure on the administration.

Bernard Yomtov:

'One way to accomplish this is to borrow some money and hire them directly. Another is to borrow money (again) and spend it on buying things, so that the businesses that make these things have every reason to hire more workers.

Doing these things also has important secondary effects. The newly employed workers will themselves increase their spending, etc.

Too bad no one has ever thought of something like this, or recommended it. It seems like an obviously sensible policy.'

I agree that this makes sense. One thing we know is that many large corporations have left a significant portion of profits overseas and that is in the form of liquid capital that can be invested. They don't bring it to the US because it will be taxed. Shareholders, like me, would like to see these profits come home since, just maybe, we could persuade these companies to pay some of this out in dividends, and these would be helpful to retired people like me, and keep many of us from needing to join the ranks of jobseekers. There is a discussion going on now about eliminating the corporate tax on these profits in order to get this capital to come home, and the arguments are politically typical.

I saw an enlightening interview last week. The CEO of a small manufacturing company with production US based and employing 400 workers, is facing significantly increased demand and is expanding production. He said he has no labor issues here but that he has not been able to raise capital for this expansion here so several hundred new jobs are going to Mexico and China since he can get access to the required capital there.

This seems to reflect some of the current practices where the financial institutions here can profit, partly due to Federal Reserve policies, without engaging in much risk at all. If businesses here are having a lot of difficulty raising capital because investors and lenders cannot get an acceptable risk/return ratio, it seems to me that this is not helping to alleviate the unemployment situation.

[Rob in CT]

I'm fine w/taking a hard look at corporate taxation. I would hope, however, that any change would be "revenue neutral." If so, somebody's taxes would have to go up to cover the removal of corporate taxes. Like, say, oh... taxes on the highest earners.

Deal?

[GoodOleBoy]

'If so, somebody's taxes would have to go up to cover the removal of corporate taxes.'

Increased dividend payouts would make my taxes go up. Increased capital investments by corporations would create jobs and that would increase tax revenues. Can't conclude that increased tax rates would be necessary for 'revenue neutrality'.

Some of our biggest corporations are sitting on a lot of cash, (I think I heard that for many of them half to two-thirds is overseas). Many of them are paying no dividends and others pay puny dividends.

Many CEO's have grown up in the M&A environment, which gave us these companies that are 'too big to fail', and with a stock market that they watch hour-to-hour, because of how their performance compensation is structured. I think the roles of institutional versus individual investors is probably too complex for me, but it would be nice if these CEO's would be a little more balanced in their approach.

[Gary Farber]

"It took a long time to get this administration to put job creation on the front burner. I mean last year all one could hear was healthcare and cap and trade."

I vaguely heard something about a "stimulus"?

But it was so uncontroversial, indeed, no one ever heard about it, really.

[Brett Bellmore]

""Why don't we put them to work?""

There is no "we"; What's stopping you?

Only the fact that you want to do it with somebody else's money...

[Nate]

Okay, so banks aren't loaning money to businesses, so the obvious answer is... to cut corporate taxes?

[Jacob Davies]

Brett: There is no "we"; What's stopping you?

The point of the exercise is to state - in terms a 5 year old could understand - that the system for allocating work is malfunctioning to a significant degree. If you were foreman on a job with 154 workers and I came by one day and found 15 of them loafing on the sidelines while necessary work went undone elsewhere, and all that was needed was for you to pay enough attention to direct them to do it, I might not be too impressed.

That's not to underrate the effectiveness of the mixed-economy model for allocating work in general. That 90% of willing workers are employed is not bad, it's just not as good as it can be, and has significant detrimental effects.

As for "somebody else's money", sort of. I favor doing it with money that is printed by the Fed. Since resource utilization is low, that won't cause inflation. The analogy is if you were able to motivate your workers with Monopoly money you could obtain for free; it would be silly to talk about you being "unable to afford" to motivate those last 15 workers, since you can pay them with tokens that don't cost you anything.

[Brett Bellmore]

In a very real sense, we don't HAVE a "system for allocating work", except in some sense that verges on tautological. We're not a command economy.

This means that occasionally you'll see work that could be usefully done, and people idle. But it also means that we don't find we can't build refrigerators because some bureaucrat allocated too many people to making toaster parts, and forgot to allocate any to making come critical refrigerator part.

To the extent that we create such a system, run by politicians and their appointees, it will put people to work doing what politicians value: Generating votes for those politicians. To the extent that it is NOT in the interest of those politicians to create jobs, (Maybe poor people vote disproportionately for the party in power?) they won't get created very efficiently.

In short, we are better off not having a "system for allocating work". And just getting out of the way of private efforts to do other things, which incidentally involve hiring people to do work.

[jonnybutter]

(Maybe poor people vote disproportionately for the party in power?)

Is that a hypothetical or something you're worried about or neither? Poor people in this country don't vote much. It's a tragedy that they don't, but they don't.

[Bernard Yomtov]

Brett,

And just getting out of the way of private efforts to do other things, which incidentally involve hiring people to do work.

Sometimes those private efforts fall short, for lack of demand. Then it becomes useful for (shudder) government to increase its demand for goods and services, in order to get those private actors hirng workers and so on.

If you seriously think that all that's needed for recovery is to "get out of the way of private efforts" then you are seriously misinformed.

[GoodOleBoy]

'the system for allocating work is malfunctioning to a significant degree'

I think I want to comment on this but I don't know what it is. Could you please enlighten me.

[russell]

This means that occasionally you'll see work that could be usefully done, and people idle.

About one of out of every six people that would like to be doing useful, productive work either can't find that work, or are working fewer hours than they'd like to be.

One of of six.

FAIL.

[Gary Farber]

"Poor people in this country don't vote much. It's a tragedy that they don't, but they don't."

Not to mention, as I linked here, James Kwak here writes:

[...] Hacker and Pierson cite studies showing that public opinion on issues such as inequality has not shifted over the past thirty years; most people still think society is too unequal and that taxes should be used to reduce inequality. What has shifted is that Congressmen are now much more receptive to the opinions of the rich, and there is actually a negative correlation between their positions and the preferences of their poor constituents (p. 111). Citing Martin Gilens, they write, “When well-off people strongly supported a policy change, it had almost three times the chance of becoming law as when they strongly opposed it. When median-income people strongly supported a policy change, it had hardly any greater chance of becoming law than when they strongly opposed it” (p. 112). In other words, it isn’t public opinion, or the median voter, that matters; it’s what the rich want.

That shift occurred in the 1970s because businesses and the super-rich began a process of political organization in the early 1970s that enabled them to pool their wealth and contacts to achieve dominant political influence (described in Chapter 5). To take one of the many statistics they provide, the number of companies with registered lobbyists in Washington grew from 175 in 1971 to nearly 2,500 in 1982 (p. 118). Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle that gave the Republicans a formidable institutional advantage by the 1980s. The Democrats have only reduced that advantage in the past two decades by becoming more like Republicans–more business-friendly, more anti-tax, and more dependent on money from the super-rich. And that dependency has severely limited both their ability and their desire to fight back on behalf of the middle class (let alone the poor), which has few defenders in Washington.

At a high level, the lesson of Winner-Take-All Politics is similar to that of 13 Bankers: when looking at economic phenomena, be they the financial crisis or the vast increase in inequality of the past thirty years, it’s politics that matters, not just abstract economic forces. One of the singular victories of the rich has been convincing the rest of us that their disproportionate success has been due to abstract economic forces beyond anyone’s control (technology, globalization, etc.), not old-fashioned power politics. Hopefully the financial crisis and the recession that has ended only on paper (if that) will provide the opportunity to teach people that there is no such thing as abstract economic forces; instead, there are different groups using the political system to fight for larger shares of society’s wealth. And one group has been winning for over thirty years.

[bobbyp]

"But it also means that we don't find we can't build refrigerators because some bureaucrat allocated too many people to making toaster parts, and forgot to allocate any to making come critical refrigerator part."

Heh. Perhaps you could explain the huge cable infrastructure overhang from the 90's or the astounding housing supply overhang from the last decade. These were huge (the latter in the trillions) resource miss-allocations. And the correction? Why throw people out of work and use state power to subsidize Wall Street....freedom's just another word.....well, hum a few bars for us, will ya'?

[wj]

bobbyp, you should have mentioned that these mis-allocations were not the work of the government that Brett so islikes. They were the work of private businesses which made serious mistakes in predicting the demand for what they were creating.

In short, while governments frequently make mistakes in allocating resources, private businesses are far from perfect in that regard either. So sad.

[bobbyp]

"They don't bring it to the US because it will be taxed."

This is simply not true. Businesses are sitting on huge cash piles (as you note further down). Theory says if there are viable opportunities available, the market will invest in them.

They aren't. There is not enough demand for the output of such investments. Fer cryin' out loud...banks can get free money from the Fed and cream of risk free income buying treasuries. If there were so many investment opportunities out there, don't you think these Masters of the Universe would jump on them?

Don't you even believe in the theory you espouse so repeatedly?

[bobbyp]

wj...true. Point taken. It's simply amazing to watch free market buccaneers trot out their 'creative destruction' nonsense and totally overlook the astounding economic waste such a system entails....but it strokes the comfortable and enables them to sleep soundly at night...well that and pills.

[Brett Bellmore]

The problem is that there aren't any "risk free" opportunities out there. The biggest risk of all out there right now is regulatory uncertainty, and the more the government does, the bigger it gets.

[ajay]

The biggest risk of all out there right now is regulatory uncertainty, and the more the government does, the bigger it gets.

Both parts of this sentence are false.

The biggest risk out there right now is macroeconomic risk - a second downturn or a sluggish recovery. Businesses aren't hiring because they are uncertain about what the economy will look like.

And regulatory uncertainty is not increased by regulatory action. It's increased by regulatory delay.

[chmood]

No, Brett - "regulatory uncertainty" is not what you think it is - the more government does to tailor regulations to the industries they're supposed to regulate, the LESS UNCERTAINTY there is for the industry in question. How you expect your "arguments" to be taken seriously - when you apparently can't tell reality from the broken record you keep playing - is one of the Great Mysteries of Life (tm) IMO.

The real uncertainty comes from the constant threat that the people of this country might figure out how to be in charge again. This may be the supposed sine qua non of today's Know-Nothings - but there is *nothing* that would screw up the plans of our crypto-feudal overlords quite so much...or frighten our "sovereign citizens" half so effectively.

[Nate]

Brett: "But it also means that we don't find we can't build refrigerators because some bureaucrat allocated too many people to making toaster parts, and forgot to allocate any to making come critical refrigerator part."

Unless, of course, that bureaucrat is a VP or CEO of a big company, who decides they don't want to build anything, and just sit on the cash, or they want to keep building SUVs instead of smaller cars when gas hits $4 a gallon, or they want to keep building McMansions instead of medium or small houses, or...

Or that bureaucrat is a wealthy hedge fund manager who won't take less than 8% return on his investments, and so keeps bundling mortgages into CDOs that are "safe" and somehow return 10%, plus netting him a nice commission when he sells them, or the guy at his firm who wants to be the rich hedge fund manager, so comes up with amazing new "innovations" that he swears up and down are safe, and return 8%, really really, and collects his commission from all the suckers. Or the takeover CEO who doesn't think the 3% profit margin of the local paper, radio station, manufacturing plant, etc that he just bought is high enough, so "rightsizes" it first, then chops it up and sells it off before replacing it with wire feed, recorded DJs elsewhere, or just ships it off to China.

That's one of the problems with income inequality, when so much of the wealth and power and production is isolated in so few people, guess what? We basically have all the downsides of a command economy (short-sighted planners, small groups subject to groupthink, lack of flexibility, disconnect from what the rest of society needs) AND the downsides of capitalism, without very many of the benefits of either. The uber-rich are the planners, and they're planning things just to line their own pockets.

Which completely defeats the point of the "free market", and also was warned about by Adam Freaking Smith, saint of the Free Marketeers!

[Rob in CT]

That's one of the problems with income inequality, when so much of the wealth and power and production is isolated in so few people, guess what? We basically have all the downsides of a command economy (short-sighted planners, small groups subject to groupthink, lack of flexibility, disconnect from what the rest of society needs) AND the downsides of capitalism, without very many of the benefits of either. The uber-rich are the planners, and they're planning things just to line their own pockets.

I hadn't thought about it like that before, but damn if that doesn't make a ton of sense.

[Countme?]

Nate, thank you for removing the sneering phrase "some bureaucrat" from mouths which have gummed it to death and dissolved its meaning over the decades and restoring it to some sort of functional use for 2010 and beyond.

Americans love to say "you're not the boss of me" (some juvenile punk Republican candidate just said it recently). Baby, everyone in America is everyone's boss, and very few know who the big bosses are.

The Soviet Union had the bureaucrats of the KGB. We Americans have each other. Heck, the Kitty is a bureaucrat.

Your comment should be a front-page post.

[Bernard Yomtov]

Brett,

The biggest risk of all out there right now is regulatory uncertainty,

This is not just wrong, it's BS manufactured to serve as a GOP talking point. Like most such, it is not even a particularly meaningful statement in the current context. Just cant. Constant places like NRO and the WSJ doesn't make it true.

As ajay says, the big risk, by far, is macroeconomic risk - risk of another downturn. This is much exacerbated by the GOP's seeming inability to understand what's going on in the economy, and the probability that we will at the mercy of their idiocies after November.

[LongHairedWeirdo]

This means that occasionally you'll see work that could be usefully done, and people idle. But it also means that we don't find we can't build refrigerators because some bureaucrat allocated too many people to making toaster parts, and forgot to allocate any to making come critical refrigerator part.

That's not the issue we're seeing. What we're seeing is that people have been screaming about costs for so long that critical infrastructure has been left falling apart.

Now, we could have been spending money to improve that stuff over the long term, but NO!COSTS!TAXES!SMALL GOVERNMENT! has been riding the brakes. Had this not been happening, it's quite possible that the overall economy would be bigger, and we'd have had a better time absorbing the shocks. Hell - with a bigger "real" economy - real people doing real work creating or maintaining real wealth - there might be a better business model out there than "figure out a way to get someone to pay a lot of money for something that has a lower intrinsic value, and get rich by doing that."

(Obviously, money-games aren't the *only* business model out there. But they're too damn big a piece of the pie.)

However, to be excruciatingly fair, the stimulus couldn't even find enough truly "shovel ready" projects to fund. And the *worst* way to handle crucial infrastructure is to do a rush job because you can get money now. (Not that slow, careful planning is all that good. Prediction: Seattle will still be debating the damned monorail in 2020.)

The problem is that most people don't get what an economy *is*. At its root, it's a way that we create a functioning society, whether it's making sure we all have nice straw huts and good meat curing for the winter, with plenty of grain stored up - or whether it's making sure we have a nice house to live in, in a decent neighborhood with a well stocked grocery store close by.

It's not about voracious accumulation of wealth. That this is often possible is a side effect, and not an entirely unpleasant one - sometimes those voracious wealth acquirers help build the bigger economy. But that's what it's become.

And because of that, the middle class gets squeezed.

They've been getting squeezed for the better part of 30 years, and it's starting to hit the limit. And without them, the economy collapses.

Now, the real tragedy here is that, with a thriving middle class, you have a much bigger economic pie. There's lots more money flowing, and lots of ways for a smart, hardworking person to find a way to make a nice pile of money. But it means that those most benefiting from income inequality be willing to take a hit, and they're often the least willing to do so.

[Thoreau]

I think a modern day New Deal is exactly what this country needs to get people back to work. Not only will this ultimately increase consumer spending as they will be unemployed, but it will also greatly help our failing infrastructure.

[Bill Jones]

"154 are in the civilian labor force."

How many of these are tax-feeding parasites?

[Countme?]

Roughly 12, according to 2006-07 figures from the tax-feeding parasites at the Census Bureau, including librarians, Sharron Angle's gummint pensioned former-of-the-BLM parasite husband, and General Patreaus' parasitical children.

The round dozen doesn't include Rush Limbaugh, who crawls like a fat parasitical slug leaving a slime trail across a public sidewalk from his studio to his limo, nor vermin parasite Jim Demint (by his own count) who steals money from me every time he has his prostate palpated through his Federal health insurance, nor parasite Neil Cavuto who takes medication for his multiple sclerosis that was partially developed with my tax dollars, nor Rupert Murdoch, the fascist parasite worm who carries an American passport without my permission but yet printed on paper I purchased for him with my tax dollars, nor Erick Erickson, who poisons our common atmosphere every time he exhales the air that my tax dollars made suitable for him to breathe, nor Sean Hannity who lies and libels under libel laws I pay to have enforced, nor Mitch McConnell (by his own count), who pisses in a urinal at the U.S. Capital that he steals money from me to pay for cleaning his parasite bodily fluids from, nor just about any parasitical conservative who uses the Internet originally developed by his or her fellow parasites with the U.S. Government.

Conservatives would spray for parasites if it weren't for the fact that their parasitical children would die.

[Shane]

Brett said:
""Why don't we put them to work?""

There is no "we"; What's stopping you?

Only the fact that you want to do it with somebody else's money...

But Brett, it's not my stuff that needs fixing, it's ours.

[Xmas]

Why don't we put them to work?

Because 50 years ago, when the village was smaller, half of the workers formed a group. And that group had enough clout to get a law passed that says whatever they get paid for a job is the minimum wage for anyone else doing that job.

Now, 50 years later, the 30 people that make up the group can still scare enough of the business owners and politicians to make sure that law won't get overturned. That group gets paid so much (they are very skilled and experienced laborers, after all), the village cannot afford to hire those 10 less skilled guys that aren't working.

[yods]

Let me get this straight.
There are people out of work, which is bad for a consumer based economy, and these are jobs that need to be done - infrastructure, education, elderly care etc... - but we can't afford fix all of this because of minimum wage?

I thought we weren't doing it because of OMG SocialismBigGoverment#$^#$5

[cheap coach bags]

Life is short, if the wasted years, the short life for too long. --- British playwright William Shakespeare.

[cheap coach bags]

Life is short, if the wasted years, the short life for too long. --- British playwright William Shakespeare.